Porter and Porter

[2014] FamCA 1119

FAMILY COURT OF AUSTRALIA

PORTER & PORTER [2014] FamCA 1119

FAMILY LAW – PROPERTY – Interim property orders – husband’s application to use the former matrimonial home as security for borrowing funds to conduct his defence in relation to criminal and intervention order proceedings – undefined asset pool – not satisfied that the parties’ assets are sufficient to cover the sum sought – application dismissed.

FAMILY LAW – INJUNCTION – Interlocutory – husband’s application to restrain the wife from discussing certain information to anyone other than her legal representatives – not satisfied the evidence supports the injunctive relief sought – application dismissed.

Family Law Act 1975 (Cth)

Blueseas Investments Pty Ltd v Mitchell, PK and McGillivray, BJ (1999) FLC 92-856
Gabel & Yardley (2008) FLC 93-386
Stanford v Stanford [2012] HCA 52
Strahan & Strahan (Interim property orders) (2011) FLC 93-466
Wenz & Archer (2008) 40 Fam LR 212

APPLICANT: Mr Porter

RESPONDENT: Ms Porter

FILE NUMBER: MLC 4774 of 2012

DATE DELIVERED: 12 December 2014

PLACE DELIVERED: Melbourne

PLACE HEARD: Melbourne

JUDGMENT OF: Macmillan J

HEARING DATE: 2 December 2014

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Crofts

SOLICITOR FOR THE APPLICANT: CRJ Law

COUNSEL FOR THE RESPONDENT: Ms Tulloch

SOLICITOR FOR THE RESPONDENT: JA Middlemis

ORDERS

IT IS ORDERED THAT

1. All extant applications for final orders be listed for mention before Justice Macmillan at 9.00 am on 17 February 2015.

2. Paragraphs 16 and 21 of the husband’s application in a case filed 19 November 2014 and the wife’s response to an application in a case filed 1 December 2014 be otherwise dismissed save and except for any applications for costs.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Porter & Porter has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

FAMILY COURT OF AUSTRALIA AT MELBOURNE

FILE NUMBER: MLC 4774 of 2012

Mr Porter

Applicant

And

Ms Porter

Respondent

REASONS FOR JUDGMENT

1. In his application in a case filed 19 November 2014 the husband sought, inter alia, orders for the sale of the former matrimonial home at A Street, Town B, and that he be paid the sum of $100,000 out of the proceeds of sale after discharge of the existing mortgage to the Commonwealth Bank and payment of the costs of that sale.  He also sought an order that the proceeds be applied to discharge the parties’ liabilities to the Australian Taxation Office and that the balance be otherwise invested in an interest bearing account in the joint names of the parties pending further order or agreement in writing.  In the alternative, the husband sought an order that the parties do all acts and things to enable any lender to the husband of a sum of up to $100,000 to register a second ranking mortgage to that of the Commonwealth Bank. The B property is registered in the sole name of the wife.

2. At the hearing before me on 20 November 2014 the wife’s case was that she intended to retain the B property. It was on that basis that the husband decided not to proceed with his application for the sale of that property. The husband also sought and was granted leave to amend paragraph 16 of his application in a case to reduce the amount for which he sought to use the B property as security from $100,000 to $40,000.

3. The husband also sought an order, which he described as “the confidentiality application”, as follows:

   That the wife, her servants and agents be and are hereby restrained from distributing, disclosing, discussing or otherwise revealing information regarding:

   (a)the husband’s business interests including but not limited to the husband’s clients;

   (b)the husband’s personal financial information;

   (c)the Family Report of [Ms M] dated 11 July 2014 and any new family report provided during the future conduct of these proceedings;

   to anyone other than her legal representatives.

4. On 20 November 2014, I listed paragraphs 16 and 21 of the husband’s application in a case for hearing by submission before me on 2 December 2014 and ordered that the wife file and serve any response to those parts of the husband’s application listed for hearing and any affidavits in support of that response by 4.00 pm on 28 November 2014.  I further ordered that the parties file and serve a bullet-point summary of the factual and legal issues in dispute by 4.00 pm on 1 December 2014.  Notwithstanding that the wife purported to e-file her response to an application in a case and affidavit in support of that response at 6.28 pm on 1 December 2014, as a result of those documents not being filed in accordance with the orders she required the Court’s leave to rely upon that material. The husband opposed the wife being granted leave to rely upon her response or the affidavit filed in support of that response on the basis that:

   ·   the wife had had more than enough time to comply with the orders and had in fact had significantly more time than was afforded to the husband to file his application in a case and his affidavit in support of that application;

   ·   the timeframe for the filing of documents was a direct result of the wife not being prepared to concede, he would submit unreasonably so, that the date fixed for the final hearing of the matter should be vacated;

   ·   it was made clear at the hearing of the matter on 20 November 2014 and also from the orders made that day that the only matters being adjourned for hearing were paragraphs 16 and 21 of the husband’s application in a case and the mother’s response sought orders with respect to the children’s schooling and payment of their education expenses; and

   ·   finally, that significant parts of the wife’s affidavit material were either not relevant or not in admissible form.

5. The parties reached agreement in relation to the children’s schooling, albeit that the husband did not concede that there had been any need for the wife to seek orders to that effect, and the wife abandoned her application for the payment by the husband of the children’s school expenses. She also made significant concessions with respect to the relevance and admissibility of those parts of her affidavit material which related to the issues the Court was required to determine and ultimately the wife was given leave to rely upon paragraphs 9, 14, 19 and 20 of her affidavit filed 1 December 2014.

6. In her bullet-point summary the wife sought to rely upon a number of paragraphs of affidavits she had filed in support of previous applications. In the face of counsel for the husband’s objection to her doing so counsel for the wife did not seek to argue that the wife should be permitted to rely upon her earlier evidence.

INTERIM PROPERTY ORDERS

1. I will turn first to the husband’s application for interim property orders. Although counsel for the husband flagged the possibility of an order being made pursuant to s 74 of the Family Law Act 1975 (Cth) (“the Act”) the husband’s case was put on the basis that an order could and should be made pursuant to s 79 and s 80(1)(h) of the Act.

2. Counsel for the husband referred me to the decision in Strahan & Strahan (Interim property orders) (2011) FLC 93-466 (“Strahan”) and the Court’s power to make orders for interim property settlement pursuant to s 79 and s 80(1)(h) of the Act. In Strahan, the Full Court, whilst acknowledging that it was preferable that there be one final hearing and one set of orders made in s 79 proceedings, considered the circumstances in which the Court might exercise its power to make an order for interim property settlement. The first step in dealing with an application for interim property settlement is for the Court to determine whether to exercise its power before a final hearing. The second step, the Court having determined that it is appropriate to exercise its power, is for the Court to exercise its discretion pursuant to s 79 of the Act.

3. The Full Court said at paragraph 132 with respect to the first step as follows:

   … in our view, when considering whether to exercise the power under s 79 and s 80(1)(h) of the Act to make an interim property order the “overarching consideration” is the interests of justice. It is not necessary to establish compelling circumstances. All that is required is that in the circumstances it is appropriate to exercise the power. In exercising the wide and unfettered discretion conferred by the power to make such an order, regard should be had to the fact that the usual order pursuant to s 79 is a once and for all order made after a final hearing.

4. The Full Court said further at paragraph 137 with respect to the second step as follows:

   Once a court proceeds to exercise the power in s 79 of the Act, being in the substantive phase, a court is required to undertake consideration of the matters in s 79(4) including by reference to s 79(4)(e) the matters in s 75(2) so far as they are relevant. However consideration of such matters may be brief and if it is established that “it seems likely to the Court that … the applicant … will be likely receive by way of property settlement a sum sufficient to cover the advance, that would seem to be sufficient to enable the order sought to be made”: Zschokke; Polletti and Polletti per Nygh J and Wenz v Archer.  As senior counsel for the Wife submitted, “provided scope can be found within the assets of the parties for an order of the size sought … then that should be the end of the matter”.  In other words, in such circumstances the applicant would only be receiving what he or she was entitled to receive when the power was exhausted.

5. The Full Court cited with approval from the decision of Riethmuller FM, as he then was, in Wenz & Archer (2008) 40 Fam LR 212 (“Wenz & Archer”) that ‘[i]t cannot be the case that a party who has an irresistible claim to a substantial share of the property of the parties should be held out of that property while the matter is litigated.’

6. The husband in this case is 48 years of age. He is in good health. He is a self-employed professional. The wife is 43 years of age and is similarly in good health. The wife deposes that she works part-time as a clerical assistant earning $280 per week net.

7. The parties commenced cohabitation in December 1996 and were married in 1999. They separated finally in March 2011 when the husband left the B property.

8. There are four children of the marriage, all of whom live with the wife and her new partner in the B property. The eldest child of the marriage, who is now 17 years of age, has elected not to spend any time with the husband. The other three children are the subject of proceedings with respect to the time they spend with the husband.  On 20 November 2014, the Court made orders by consent requiring the husband and the wife to ensure that the three youngest children attend therapeutic counselling and that they ensure that the children spend time with the husband as may be recommended by their counsellor.

9. The husband is currently facing the contested hearing of the wife’s application for a final intervention order and a number of criminal charges, and the money he wishes to borrow and for which he requires the security of the B property is to fund his defence to those charges and his opposition to the intervention order. The husband is facing four charges of committing “an indecent act with a child under 16” – one charge in relation to each of the four children – which carries a maximum penalty of 10 years imprisonment, one charge of intentionally causing injury to the wife which carries a maximum penalty of 10 years imprisonment, and one charge of harassing a witness, that witness being the wife.

10. Counsel for the husband submitted that it is just and equitable for the Court to make the order he seeks because:

    ·   although the matrimonial pool is small and in dispute, no Court could sanction an outcome whereby the husband would ultimately be responsible for all of the debt whilst the wife retained all of the assets and equity;

    ·   that as Finn J observed in Gabel & Yardley (2008) FLC 93-386, where the Court considers it appropriate to adjourn pending property settlement proceedings, ‘it may also be considered appropriate to make some orders in relation to the then existing property’, and that no more appropriate circumstance could exist for the making of an order than the husband’s need to defend himself against the allegations of family violence made against him, thereby preserving his income earning capacity, his ability to service debt, and the assets available for division between the parties; and

    ·   the need for the order must be weighed against the risks that the exercise of power may interfere with the Court’s power to make just and equitable orders on a final basis.    

11. Counsel for the husband submitted that the husband had attempted to obtain further funds from his parents and Westpac however both would require security and, with respect to further funds being released by Westpac, his business partners would have to agree to take on that extra risk. Counsel submitted that it would unjust and inequitable if the husband were prevented from running a proper defence to the charges due to a lack of funds.

12. The husband relied upon an aide memoire setting out his version of the assets and liabilities. It was his case, based upon that document, that the wife has assets of approximately $297,000 and that he has liabilities of approximately $211,000. The property held by the husband includes what he describes as business interests in the sum of $85,614 based upon the valuation prepared by the single expert valuer Mr W. The figure of $85,614 is made up of what is described by the single expert as family loans of $94,484 less the professional practice’s negative equity of $8,870. The figure that is described as family loans is made up of unpaid present entitlements in the sum of $291,483 due to the husband and the wife less drawings of $200,960.

13. The husband has included in his list of the wife’s assets the $15,000 she received by way of interim property settlement and the amount she received as a trade-in on the Mazda motor vehicle.  Although the fact that the wife has had the benefit of these monies may be taken into account by the Court in determining what order, if any, it should make, they are arguably not amounts that should be “added back” to the pool of assets as identified by the husband. The husband has also included a figure of $25,000 for the contents of the B property retained by the wife, the inclusion of which is disputed by counsel for the wife.

14. The husband has also included in his liabilities loans from his father and his brother and credit card debts. The wife disputes that these liabilities are liabilities of the marriage.

15. It is the wife’s case that based upon the husband’s figures – but excluding the household contents, the $15,000 and the trade-in value of the Mazda motor vehicle – the net equity in the pool is approximately $30,000.

16. Riethmuller FM, as he then was, said in Wenz & Archer at paragraph 51 as part of his analysis of decisions of both the Full Court and first instance decisions of the Family Court dealing with interim property settlements said as follows:

    Thus, a consideration of the need for and effect of interim orders weighed against the risks that the exercise of the power on an interim basis will interfere with the power of the court to make ‘just and equitable’ orders on a final basis is required.  Importantly, the considerations that may weigh in favour of such an order should not be considered to be limited, but must be determined on the facts and circumstances of each case: see generally Bonisoli and Bonisoli [1996] FamCA 45 at [13].

17. Having analysed the legislation and the authorities, Riethmuller FM, as he then was, made a number of comments with respect to interim property applications, including at paragraph 57 sub-paragraphs (c) and (d) as follows:

    As it is an interim hearing careful consideration must be given to the potential impact of any disputed facts and circumstances.  Consideration must be given to the claims of the parties and their legitimate expectations. Whether the orders could be later reversed, bearing in mind the need to ultimately be in a position to make ‘appropriate’ orders that are ‘just and equitable’, will often be a significant, but not necessarily determinative consideration.  For example the sale of an asset may not be reversible, but may be inevitable on any version of the facts of the case.  In other cases the present needs may be so compelling as to outweigh these risks.

    The reasons for making interim orders must be identified and assessed to allow them to be properly weighed against the risk that interim orders may pose to the parties’ claims or legitimate expectations.

18. This is not a case, such as that described by the Full Court in Blueseas Investments Pty Ltd v Mitchell, PK and McGillivray, BJ (1999) FLC 92-856, where it can be said that the husband has an irresistible claim to a substantial share of the property of the parties. In this case, the difficulty lies in the fact that there may be little property to ultimately divide between the parties in the event that the court determines that it is just and equitable to make orders for property settlement.

19. Although I accept that the husband’s need for the funds to conduct his defence to the criminal charges and the intervention proceedings is legitimate and is a reason why the Court might make an interim order for property settlement, I cannot, based upon the evidence before me and in particular the figures upon which the husband relies, be satisfied that the interim orders the husband seeks in this case would not interfere with the power of the Court to make just and equitable orders on a final basis. Whilst it is possible that not all of the liabilities the husband says should be taken into account will be taken into account, or that some of the assets the wife says should not be included in that pool will be included, these are interim proceedings and I cannot make findings in relation to either the composition or value of the asset pool.  

20. I am not satisfied that in this case there is the scope within the assets of the parties, as the husband asserts them to be, for the Court to make the order the husband seeks notwithstanding his legitimate and immediate need for the funds to conduct his defence.

21. Although the risk that an interim order might interfere with the Court’s power to make just and equitable orders on a final basis is not necessarily determinative of the matter, it is a significant factor in this case.  It is possible in this case that even if the husband has access to the funds he says are necessary for him to conduct his defence that he will nonetheless be convicted of some or all of the criminal charges he faces or a final intervention order will be made against him and that, as a result, both his interest in the professional practice and his income earning capacity will be affected.  Even if he is not convicted or a final intervention order is not made, it is his evidence that the application for the intervention order and the criminal proceedings generally have the potential to damage his professional reputation and cause the collapse of his businesses, impacting upon the practice’s capacity to repay the parties their entitlements.  This would potentially leave the parties in a significantly worse position by the time the matter is before the Court on a final basis, preventing the Court from doing justice to the parties and in particular the wife. Although Counsel for the wife has said that the wife proposes to retain the B property whatever the outcome of the proceedings, I am not in a position, on the evidence before me, to determine whether that is or is not possible and what effect the order the husband seeks might have upon her capacity to do so.

1. Although it is submitted by counsel for the husband that the Court could not sanction an outcome that leaves the husband with all the debt whilst the wife keeps all the assets, it is simply not possible at this stage of the proceedings, without the evidence being tested and the Court being in a position to consider all of the relevant and competing claims of the parties, to speculate as to what the Court will ultimately determine to be a just and equitable outcome in this case. In all of the circumstances and in particular the limited scope of the parties’ assets and the uncertainty of the husband’s financial position, I am not satisfied that this is an appropriate case in which to exercise the Court’s power and make the orders sought by the husband. I am satisfied that for all of the reasons I have discussed that in this case it would be preferable for there to be one final hearing. On that basis I propose to dismiss the husband’s application for interim property orders.

THE CONFIDENTIALITY APPLICATION

1. I will now turn to second part of the husband’s application. In support of his application, the husband relied upon his evidence that:

   ·   the wife had approached him ‘on various occasions, regardless of the circumstances’ and on one occasion in January 2012 when he was in a café with a client;

   ·   the wife had approached his former and current business partners and his bank manger regarding these proceedings and their commercial relationships with him;

   ·   the town where the parties live and the husband’s practice is located is a “small town” and he has found the wife’s behaviour concerning and embarrassing to his professional reputation; and

   ·   the family report prepared by Ms M has found its way into the prosecution brief of evidence without his knowledge or consent.

2. Although I am not in a position to make findings of fact in relation to those aspects of the husband’s evidence that are disputed by the wife, it was submitted by the wife, and in my view with some force, that the husband’s evidence is not sufficiently particularised and that the particular matters upon which the husband relies all occurred some years ago.  For example, the husband deposes that in January 2012 he applied for an intervention order against the wife on the basis of what he said were the wife’s persistent and unwelcome communications with him including attendances at his home and his then partner’s home. There is no detail provided in relation to the wife’s alleged communications or attendances at his home.

3. Although the wife admits that she approached the husband in a café and concedes that she should not have said what she said to the husband on that occasion, it is her evidence that this happened soon after separation and on only the one occasion. In relation to the wife contacting the husband’s bank manager, counsel for the wife submitted that the husband’s bank manager was also the wife’s bank manager at that time and she contacted him after receiving a default notice with respect to the B property. There is no evidence in relation to any more recent incidents.

4. I am not satisfied that it would be proper based upon the evidence upon which the husband relies for the Court to grant the injunctive relief sought by the husband. Accordingly, I also propose to dismiss this part of the husband’s application.

5. On 20 November 2014 I vacated the final hearing which was due to commence on 2 December 2014. The contested hearing of the wife’s application for a final intervention order is listed for hearing in the Magistrates Court in December 2014 and the husband’s criminal charges are listed for a committal hearing on 15 January 2015. On that basis, I will list the matter for mention before me in mid-February 2015 to consider the further conduct of this matter.

I certify that the preceding thirty-three (33) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Macmillan delivered 12 December 2014.

Associate: 

Date:  12 December 2014